The country is experiencing an acute labor shortage, hindering dynamic economic development. Attempts by Lithuanian employers to retain staff have not been very successful. Entrepreneurs are frantically looking for ways to solve the labor problem. They are relying on offshore companies and attracting labor from abroad. As Expert notes, it has become obvious that without changing the state immigration policy, which should be aimed at attracting external labor resources, the problem cannot be solved.
Total "Hunger"
Today, demand in the Lithuanian labor market exceeds supply by more than three times. The labor shortage is structural and is especially acute among blue-collar occupations. According to the Lithuanian Labor Exchange, construction companies suffer the most. In addition, there is a shortage of workers in the agricultural sector (demand exceeding supply by two times), woodworking (1.9 times), and the furniture industry (1.6 times). Sometimes the gap reaches fantastic proportions: in Kaunas, there are about 190 vacant jobs for every warehouse worker.
But even in relatively prosperous sectors, there is a chronic shortage of skilled personnel because the quality and quantity of training programs in the vocational education system do not meet business needs.
The level of labor shortage varies by region. Large industrial centers (Vilnius, Kaunas, Klaipėda, Šiauliai, Panevėžys) are particularly affected, where the unemployment rate in 2007 dropped below 3%. Only in the Ignalina district did this figure exceed 6% (according to labor market experts, an unemployment rate below this figure slows down economic development).
Reverse Trickle
Competition for staff is leading to rising labor costs in Lithuania. In the most scarce occupations, wages are growing by 30-40% per year. According to media reports, earnings of €1,500-2,000 are no longer unusual for construction specialists, and over €1,000 for dockers. Even milkmaids, whose work was traditionally considered low-skilled and low-paid, earn €500-700 per month in some farms.
The wage increase played a positive role in improving the situation. Especially since initial ideas about a "Klondike" in the old European countries turned out to be greatly exaggerated. Nominally, wages in England or Ireland are still several times higher than in Lithuania. But food and rent in those countries are also much more expensive. Already in 2006, immigration began to decline, and analysts spoke of a wave of "returnees." According to the Lithuanian Migration Department, about 5,000 people returned last year. The influx of specialists enriched with advanced production and socio-cultural experience cannot but please. But the number of "returnees" is still tens of times less than those who left.
Not Enough
Meanwhile, Lithuanian businesses, even the most successful, will not be able to sustain further wage increases and compete for staff with more efficient European companies.
In recent years, the number of migrants has been growing. Mostly they are from neighboring countries – Ukrainians, Belarusians, Russians. The inflow of citizens from Romania and Bulgaria noticeably increased after their accession to the EU. In other words, people come from countries where wages are lower than in Lithuania. This allows Giedrius Kadziauskas, an expert at the Lithuanian Free Market Institute, to regard the migration flow as transit, in which Lithuania plays the role of a stopover on the way to more "expensive" Western countries. According to Kadziauskas, Lithuania for foreign workers becomes a kind of "anteroom," a place of initial adaptation to the rules and conditions of the EU.
Migrants do not meet the needs of Lithuanian employers for quality personnel, as most are people of low qualifications and general culture, in particular without knowledge of foreign languages. And the number of imported specialists is small – according to the Lithuanian Labor Exchange, about 4,000 specialists will enter the country under labor quotas this year. In total, foreigners make up no more than 0.2% of all employed in the Lithuanian economy.
The inflow of foreign workers is primarily constrained by Lithuania's conservative and strict immigration policy. The experience of leading European countries such as England, France, and Germany, which readily attract migrant workers, is seen here as negative, and it is extremely dangerous for a small state to repeat it. Those wishing to work in Lithuania undergo a very strict selection process. For example, in 2005, only 876 applications out of more than 7,000 were accepted; in 2006, almost 9,000 were submitted, and less than a third were satisfied. Until recently, the document processing procedure dragged on for many months, and work permits had to be renewed annually.
Ajar Door
Employers are dissatisfied with the current rules and persistently demand that the country's government ease the migration regime. The first concessions are already being made. Since spring 2007, workers in the most scarce specialties have been able to start working immediately upon arrival and simultaneously obtain an official permit within three months.
In the fall of 2007, the Lithuanian Ministry of Labor and Social Protection made additions to the documents defining the procedure for employing foreign citizens. From now on, territorial labor exchanges are obliged to consider documents for the employment of highly qualified specialists within two weeks and issue permits within a month. The list of documents that employers must submit has also been shortened. For example, the responsibility for gathering information on whether a company has debts to the tax inspectorate or is under court proceedings for bankruptcy has now been placed on labor exchanges. It has become much easier to re-hire a sought-after specialist. However, despite lobbying efforts by employers, the state is not yet ready to open its doors wide to labor migrants.
Irish-style or Dutch-style?
This summer, the Ministry of Labor and Social Protection adopted a 'Strategy for Regulating Economic Migration,' which quite unambiguously sets out the principles for managing immigration. It strictly defines the attitude towards immigrants from non-EU countries. 'Workers from third countries can be allowed into the Lithuanian labor market only in those sectors where a shortage of local and EU personnel is identified,' the document states.
Some Lithuanian officials, openly fearing the 'Islamization' of the country, demand that the 'geographical factor' be more clearly spelled out in immigration policy. For instance, according to Dainis Paukštis, deputy director of the Migration Department under the government, when importing people from third countries, the principle of priority should be followed, favoring those countries that are drawing closer to the EU (Ukraine, Moldova, the South Caucasus) or participating in the European Neighborhood Policy (Russia, Belarus). He insists on the need to strictly adhere to the 'Dutch position that economic migration should be temporary' and that the countries from which migrants come should take them back after the end of their employment relationship.
But businessmen hold the opposite view. Expressing their opinion, the chairman of the parliamentary Committee on Rural Affairs, Viktoras Rinkevičius, called on the authorities to abandon the fear of 'dissolving' into a sea of newcomers and follow the example of Ireland and England, which actively use the potential of guest workers. 'We need to finally decide what we want: Lithuania only for Lithuanians, or a competitive, higher standard of living. If we regulate immigration flows, they can be easily integrated into Lithuanian society, left to work here so that in a few decades they become full citizens improving the demographic situation,' echoes the director of the Lithuanian Migration Department, Almantas Gavėnis.
It appears that the 'not be afraid and open up' position will ultimately prevail. Symptomatically, the Migration Department, a rather conservative structure, recently submitted to the Seimas proposals for amendments to the Constitution, according to which children of foreigners born in Lithuania become Lithuanian citizens.